MACD (Moving Average Convergence Divergence) and RSI (Relative Strength Index) are chart indicators that score how fast a price has been moving. Neither the MACD rule nor the RSI rule beat buy-and-hold on any of 15 funds. Buy-and-hold means buying once and never selling.
We turned each indicator into a trading rule and counted dividends, the cash a fund pays out. We wrote this on 11 November 2026. Each fund's test runs from its own start, between 1993 and 2005, to 10 November 2026.
Is MACD or RSI more useful? It depends on the measure. MACD reduced the worst fall more. RSI traded far less. Neither earned more than buy-and-hold in any of 15 funds.
Over each fund's test window, MACD had a smaller worst fall than buy-and-hold (the largest drop from a high) in all 15 funds. RSI had a smaller one in 10 and the same in 5. RSI made a median of 42 trades against 560 for MACD.
On SPY (the S&P 500 exchange-traded fund, a fund that trades like a share), $10,000 invested on 27 April 1993 became $310,904 by holding. The MACD rule gave $41,213 and the RSI rule gave $48,546.
Every result is a backtest, a test of a rule on past prices.
What do MACD and RSI measure?
MACD is the gap between a 12-day and a 26-day moving average of a price. A moving average is the mean of the last 12 or 26 closes, weighted to recent days. A 9-day average of that gap is the signal line.
What Is the MACD Indicator? shows how it is built. The textbook reading takes a rise above the signal line as a sign of gains ahead and a fall below as a sign of losses ahead.
RSI is a score from 0 to 100 that compares recent gains with recent losses over 14 days. The hub guide is What Is the RSI Indicator?. The textbook reading calls a score above 70 overbought and a score below 30 oversold.
How did we test the two rules?
We used 15 US-listed funds, which are baskets of assets traded like shares: the S&P 500, the Nasdaq-100, small companies, developed markets, nine sectors, gold, and long Treasuries. The nine sectors are the sector funds with prices since 1998.
The MACD rule holds the fund while the MACD line is above its signal line. Otherwise it holds cash.
The RSI rule starts invested. It sells after RSI first rises above 70, the level called overbought. It buys again after RSI first falls below 30, called oversold.
We used standard settings. A signal read at one close changes the position from the next close. The first 60 closes of each fund warm up the indicators.
Each rule and buy-and-hold then run over the same window, which ends on 10 November 2026. We ignore costs at first.
A trade is one switch into or out of the fund. The worst fall is the largest drop from a high in the value of the account over the window. Every figure is a backtest. What Is Backtesting? explains why such tests can mislead.
Which rule earned more?
Across the 15 funds, the median annual return was 8.71% for holding, 3.27% for the MACD rule, and 3.94% for the RSI rule. The RSI rule earned more than the MACD rule in 9 of the 15 funds. The MACD rule earned more in 6.
Source: YX Insights price data
On SPY, $10,000 invested on 27 April 1993 became $310,904 by holding. The MACD rule gave $41,213 and the RSI rule gave $48,546.
Both rules sat in cash for long stretches of a rising market. The MACD rule held SPY on 50.5% of days. The RSI rule held it on 34.4%.
How far behind holding was each rule?
Source: YX Insights price data
Chart 2 shows each rule's annual return minus the annual return of holding. Every one of the 30 bars is negative. The median gap was 4.7 percentage points for MACD and 4.3 for RSI.
Which rule fell less?
MACD fell less. Its worst fall was smaller than that of holding in all 15 funds. The median worst fall was 38.0% for the MACD rule and 59.0% for holding and for the RSI rule.
The RSI rule had a smaller worst fall than holding in 10 funds and the same in 5. The MACD rule's worst fall was smaller than the RSI rule's in 12 funds. The RSI rule's was smaller in 3: consumer staples, health care, and long Treasuries.
The table below shows, for each fund, the annual return, the worst fall, and the number of trades under each rule.
Annual return, Hold (%) | Annual return, MACD (%) | Annual return, RSI (%) | Worst fall, Hold (%) | Worst fall, MACD (%) | Worst fall, RSI (%) | Trades, MACD | Trades, RSI | |
|---|---|---|---|---|---|---|---|---|
S&P 500 (SPY) | 10.79 | 4.31 | 4.82 | −55.2 | −38.0 | −55.2 | 716 | 57 |
Nasdaq-100 | 10.44 | 3.23 | 3.55 | −83.0 | −72.5 | −76.7 | 554 | 48 |
Small companies | 8.06 | 5.11 | 3.94 | −59.0 | −40.1 | −59.0 | 534 | 42 |
Developed markets | 6.73 | 1.41 | 1.94 | −61.0 | −49.5 | −58.3 | 520 | 38 |
Technology | 9.69 | 2.64 | 2.32 | −82.0 | −65.9 | −78.4 | 591 | 46 |
Energy | 8.77 | 3.62 | 4.43 | −71.3 | −60.6 | −66.5 | 567 | 41 |
Financials | 5.83 | 2.84 | 0.62 | −82.7 | −64.9 | −82.7 | 553 | 37 |
Utilities | 7.85 | 3.19 | 5.99 | −52.0 | −37.9 | −49.4 | 560 | 50 |
Materials | 8.17 | 4.73 | 4.18 | −59.8 | −40.5 | −59.8 | 562 | 41 |
Industrials | 9.05 | 5.80 | 3.43 | −62.3 | −29.1 | −60.6 | 542 | 42 |
Consumer staples | 6.89 | 1.64 | 4.79 | −35.9 | −32.5 | −32.4 | 602 | 49 |
Health care | 8.71 | 3.27 | 6.66 | −39.2 | −33.3 | −27.1 | 562 | 55 |
Consumer discretionary | 9.24 | 4.58 | 6.86 | −59.0 | −31.2 | −59.0 | 574 | 49 |
Gold | 10.45 | 7.95 | 3.43 | −45.6 | −21.9 | −29.2 | 438 | 35 |
Long Treasuries | 3.33 | 1.77 | 1.87 | −48.3 | −37.4 | −30.9 | 479 | 36 |
Median of 15 | 8.71 | 3.27 | 3.94 | −59.0 | −38.0 | −59.0 | 560 | 42 |
Annual return is the compound annual rate with dividends counted. Worst fall is the largest drop from a high in the value of the account. A trade is one switch into or out of the fund. Source: YX Insights price data
The RSI rule matched holding in five funds, because it held those funds through the 2007 to 2009 fall that was each one's deepest.
How many trades does each rule make?
The MACD rule made a median of 560 trades per fund, from 438 to 716. That is 20.3 a year.
The RSI rule made a median of 42 trades per fund, from 35 to 57. That is 1.6 a year. It held the fund on a median of 41.6% of days, against 50.9% for the MACD rule.
We then charged a cost of 0.05% on every switch. The median gap to holding widened to 5.7 points for MACD and 4.4 points for RSI. Neither rule beat holding in any fund.
When does the answer change?
SPY had four falls of at least 20% from a closing high between 1993 and 10 November 2026, with dividends counted.
Source: YX Insights price data
The MACD rule fell less than holding in all four. It also fell less than the RSI rule in three. The RSI rule fell less in the 2022 fall, at 4.8% against 11.0%.
The RSI rule had already sold before three of the four falls, because RSI had risen above 70 and not yet dropped below 30. It bought back during the 2000 and 2020 falls, after RSI fell below 30. In the 2007 to 2009 fall, it was still invested, so it fell as far as holding did.
Holding gained more than either rule in all four recoveries, which run from each low to the next closing high.
Does the result hold up?
We ran 180 tests in all. A test is one rule on one fund over one window. That covers the main run, the cost runs, the halves, and the variant.
We also split each fund's window at its midpoint. In the halves, the MACD rule beat holding in 1 fund in the first half and 2 in the second. The RSI rule beat it in 2 and 1.
We also tried one other version of the RSI rule. It holds cash only while RSI is above 70, so it held the fund on a median of 93.3% of days.
Before costs, it beat holding in 11 of 15 funds. Across all 15, the median gap was 0.26 points a year in its favour. After the 0.05% cost, it beat holding in 7 funds, behind by a median of 0.28 points.
Before costs, it beat holding in 12 funds in the first half and 8 in the second. This version is not the textbook rule. We tested it after seeing the textbook result, so it does not show an edge.
What the test does not show
The test covers 15 US-listed funds and the standard settings only.
The rules held the fund or cash. We gave cash no interest and ignored taxes. The windows differ by fund, from 21.7 to 33.5 years.
So which is more useful?
On this test, MACD is more useful for a smaller worst fall. RSI is more useful for far fewer trades. On return, holding won in every fund.
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Common questions about MACD and RSI
Is MACD better than RSI?
Neither was better on return. Over 15 funds to 10 November 2026, neither textbook rule beat holding. MACD had the smaller worst fall in 12 funds against RSI's 3, while RSI made a median of 42 trades against 560 for MACD. The better one depends on which of those two matters more.
Do MACD and RSI beat buy-and-hold?
Not in this test. The MACD rule and the textbook RSI rule each earned less than holding in all 15 funds. The median annual return was 3.27% for MACD and 3.94% for RSI, against 8.71% for holding. Both rules sat in cash for long stretches while prices rose.
How many trades do MACD and RSI make?
The MACD rule made a median of 560 trades per fund over the full history, about 20 a year. The RSI rule made a median of 42, about 1.6 a year. A trade is one switch into or out of the fund. The tests ignored costs at first, then charged 0.05% a switch.
Which has the smaller worst fall, MACD or RSI?
MACD did in 12 of 15 funds. Its median worst fall was 38.0%, against 59.0% for the RSI rule and for holding. The RSI rule did better in 3 funds: consumer staples, health care, and long Treasuries. In SPY's 2022 fall, the RSI rule fell 4.8% and the MACD rule 11.0%.
DISCLAIMER: This article is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
